<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
Commission File No. 0-23306
PROPHET 21, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 23-2746447
- ------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
19 West College Ave., Yardley, Pennsylvania 19067
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(215) 493-8900
------------------------
(Registrant's Telephone Number,
Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes: X No:
----- -----
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of February 5, 1997:
Class Number of Shares
----- ----------------
Common Stock, $.01 par value 3,829,000
<PAGE>
PROPHET 21, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
-----------------
Page
----
PART I. FINANCIAL INFORMATION........................................ 1
Item 1. Financial Statements.................................... 1
Consolidated Balance Sheets
as at June 30, 1996 and
December 31, 1996 (unaudited)................................ 2
Consolidated Statements of Operations
for the three months and the six months ended
December 31, 1995 and 1996 (unaudited)....................... 3
Consolidated Statements of Cash Flows
for the six months ended
December 31, 1995 and 1996 (unaudited)....................... 4
Notes to Consolidated Financial Statements
(unaudited).................................................. 5
Item 2. Management's Discussion and Analysis
of Results of Operations and Financial
Condition............................................... 7
PART II. OTHER INFORMATION............................................ 11
Item 4. Submission of Matters to a Vote of
Security Holders........................................ 11
Item 6. Exhibits and Reports on Form 8-K........................ 11
SIGNATURES............................................................... 12
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<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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<PAGE>
PROPHET 21, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1996
---------- ------------
(Unaudited)
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................... $ 2,860 $ 3,280
Marketable securities............................................... 5,795 6,837
Accounts receivable, net of allowance for
doubtful accounts of $209 and $278, respectively.................. 12,029 10,382
Inventories......................................................... 1,546 1,801
Prepaid and other current assets.................................... 618 347
---------- ------------
Total current assets....................................... 22,848 22,647
Equipment and improvements, net........................................ 2,242 2,250
Deferred income taxes.................................................. 19 19
Software development costs............................................. 458 1,157
Other assets........................................................... 265 225
---------- ------------
Total assets............................................... $ 25,832 $ 26,298
========== ============
<CAPTION>
Liabilities and Stockholders' Equity
<S> <C> <C>
Current liabilities:
Accounts payable.................................................... $ 2,922 $ 2,879
Accrued expenses and other liabilities ............................. 957 1,079
Commissions payable................................................. 381 326
Taxes payable....................................................... 391 636
Profit sharing plan contribution payable ........................... 250 377
Deferred income .................................................... 1,950 2,098
---------- ------------
Total current liabilities ................................. 6,851 7,395
---------- ------------
Commitments and contingent liabilities
Stockholders' equity:
Preferred stock -- $0.01 par value, 1,500,000
shares authorized; no shares issued or
outstanding..................................................... -- --
Common stock -- $0.01 par value, 10,000,000 shares authorized;
4,002,500 shares issued......................................... 40 40
Additional paid-in capital.......................................... 8,821 8,821
Retained earnings .................................................. 10,120 10,879
Less: treasury stock at cost,
149,500 shares at December 31, 1996.......................... -- (837)
---------- ------------
Total stockholders' equity ................................ 18,981 18,903
---------- ------------
Total liabilities and stockholders' equity ................ $ 25,832 $ 26,298
========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
PROPHET 21, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended December 31, Ended December 31,
------------------------------------- -------------------------------------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
System sales................................. $ 5,090 $ 5,171 $ 10,198 $ 10,546
Service and support.......................... 2,959 3,532 5,699 6,768
----------- ----------- ----------- -----------
8,049 8,703 15,897 17,314
----------- ----------- ----------- -----------
Cost of revenue:
System sales................................. 2,938 2,914 5,634 6,001
Service and support.......................... 1,589 1,767 3,057 3,479
----------- ----------- ----------- -----------
4,527 4,681 8,691 9,480
----------- ----------- ----------- -----------
Gross profit............................ 3,522 4,022 7,206 7,834
----------- ----------- ----------- -----------
Operating expenses:
Sales and marketing.......................... 1,861 2,065 3,829 4,241
General and administrative................... 556 591 1,102 1,184
Research and development..................... 547 711 1,115 1,326
----------- ----------- ----------- -----------
2,964 3,367 6,046 6,751
----------- ----------- ----------- -----------
Operating income........................ 558 655 1,160 1,083
Interest income................................. 109 93 218 182
----------- ----------- ----------- -----------
Income before taxes............................. 667 748 1,378 1,265
Provision for income taxes...................... 262 299 544 506
----------- ----------- ----------- -----------
Net income...................................... $ 405 $ 449 $ 834 $ 759
=========== =========== =========== ===========
Net income per share............................ $ 0.10 $ 0.11 $ 0.21 $ 0.19
=========== =========== =========== ===========
Weighted average common
and common equivalent shares
outstanding.................................. 4,003 3,970 4,003 3,985
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
PROPHET 21, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Six Months Ended December 31,
-------------------------------------------
1995 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income..................................................................... $ 834 $ 759
------------ ------------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.............................................. 506 539
Provision for losses on accounts receivable................................ 5 69
Decreases (increases) in operating assets:
Accounts receivable........................................................ (1,704) 1,578
Inventories................................................................ (157) (255)
Prepaid expenses and other assets.......................................... 197 311
Increases (decreases) in operating liabilities:
Accounts payable........................................................... (195) (43)
Accrued expenses........................................................... (41) (21)
Income taxes payable....................................................... 156 333
Profit sharing plan contribution payable................................... 133 127
Deferred income............................................................ 298 148
------------ ------------
Total adjustments.......................................................... (802) 2,786
------------ ------------
Net cash provided by operating activities...................................... 32 3,545
------------ ------------
Cash flows from investing activities:
Cash purchases of equipment................................................ (430) (589)
Software development costs................................................. -- (699)
Purchase of marketable securities.......................................... (5,240) (2,000)
Maturity of marketable securities.......................................... 4,000 1,000
------------ ------------
Net cash used by investing activities.......................................... (1,670) (2,288)
------------ ------------
Cash flows from financing activities:
Purchase of treasury stock................................................. -- (837)
------------ ------------
Net cash used by financing activities.......................................... -- (837)
------------ ------------
Net (decrease) increase in cash and cash equivalents........................... (1,638) 420
Cash and cash equivalents at beginning of period............................... 7,064 2,860
------------ ------------
Cash and cash equivalents at end of period..................................... $ 5,426 $ 3,280
============ ============
Supplemental cash flow disclosures:
Income taxes paid.......................................................... $ 387 $ 40
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
PROPHET 21, INC. AND SUBSIDIARIES
---------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(Information for December 31, 1995 and 1996 is unaudited)
Note 1 -- Basis of Presentation:
The information presented for December 31, 1995 and 1996, and for the
three-month and the six-month periods then ended, is unaudited, but, in the
opinion of the Company's management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting only of normal
recurring accruals) which the Company considers necessary for the fair
presentation of the Company's financial position as of December 31, 1996 and the
results of its operations and its cash flows for the three-month and the
six-month periods ended December 31, 1995 and 1996. The financial statements
included herein have been prepared in accordance with generally accepted
accounting principles and the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. These
consolidated financial statements should be read in conjunction with the
Company's audited financial statements for the year ended June 30, 1996, which
were included as part of the Company's Annual Report on Form 10-K.
The consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany balances have been
eliminated.
Results for the interim period are not necessarily indicative of
results that may be expected for the entire year.
Note 2 -- Inventories (in thousands):
A summary of the major components of inventories are as follows:
<TABLE>
<CAPTION>
June 30, December 31,
----------------- -----------------
1996 1996
---- ----
<S> <C> <C>
Finished goods............................ $ 1,412 $ 1,737
Used equipment inventory.................. 134 64
----------- -----------
$ 1,546 $ 1,801
=========== ===========
</TABLE>
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<PAGE>
PROPHET 21, INC. AND SUBSIDIARIES
---------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(Information for December 31, 1995 and 1996 is unaudited)
Note 3 -- Capitalized Software Development Costs (in thousands):
The Company has capitalized certain software development costs in
accordance with the Statement of Financial Accounting Standards Board ("SFAS")
No. 86. Such costs are capitalized after technological feasibility has been
demonstrated. Such capitalized amounts will be amortized commencing with product
introduction on a straight-line basis utilizing the estimated economic life of
three years. Amortization of capitalized software development will be charged to
cost of sales. At June 30, 1996 and December 31, 1996, the Company had
capitalized $458 and $1,157 of software development costs, respectively, none of
which had been amortized. All other research and development costs have been
expensed.
Note 4 -- Stockholders' Equity:
Preferred Stock
The Company has an authorized class of 1,500,000 shares of Preferred
Stock which may be issued by the Board of Directors on such terms and with such
rights, preferences and designations as the Board may determine.
Note 5 -- Stock Repurchase Program:
In August 1996, the Company's Board approved a resolution to
repurchase up to 400,000 shares of its Common Stock in open market purchases.
The Company repurchased 149,500 shares at a cost of $837,000 during the first
two quarters of fiscal 1997. As of February 5, 1997, the Company had repurchased
an additional 24,000 shares at a cost of $142,500.
-6-
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
General
The Company was founded in 1967 to provide custom programming services
and, in 1974, it began to design, develop, market and support automated business
management systems for distributors, wholesalers and dealers. The Company's
revenue is derived primarily from the sale of Prophet 21 Systems, maintenance
contracts which provide for software support and equipment maintenance and the
sale of optional software products. Each Prophet 21 System includes the Prophet
21 XL Software, an IBM RISC System/6000 computer, various optional third party
software products and hardware components, training, support and installation.
The Company's cost of revenue consists principally of the costs of hardware
components, customer support, installation and training and, to a lesser extent,
third party software.
The Company implemented a strategic decision early in 1992 to move
from its internally developed proprietary hardware system to an open system
platform, based on the UNIX/AIX operating system running on an IBM RISC
System/6000 computer. The Company's adoption of an open system solution
broadened the market for the Prophet 21 System, facilitated greater customer
acceptance and allowed successful integration of industry standard third party
software and hardware.
In fiscal 1996, the Company introduced its next generation product,
Prophet 21 Acclaim, a complete business management system that combines the
functionality of the traditional Prophet 21 System with the technology of
Progress Software Corporation's DBMS. Prophet 21 Acclaim is targeted for sales
to new and current customers. It has been designed so that current customers can
move to this new product while preserving their existing technology
infrastructure. The general release of Prophet 21 Acclaim began late in the
Second Quarter of Fiscal 1997 (as defined below).
Results of Operations
Three Months Ended December 31, 1995 and 1996
Revenue. Revenue increased by 8.1%, or $654,000, from $8,049,000 in
the three months ended December 31, 1995 ("Second Quarter of Fiscal 1996") to
$8,703,000 in the three months ended December 31, 1996 ("Second Quarter of
Fiscal 1997"). System sales revenue increased by 1.6%, or $81,000, from
$5,090,000 in the Second Quarter of Fiscal 1996 to $5,171,000 in the Second
Quarter of Fiscal 1997. There was an increase in such sales attributable
primarily to sales of the Company's new Prophet 21 Acclaim product which began
late in the Second Quarter of Fiscal 1997. Such increase was offset, in part, by
a decrease in programming revenue. Service and support revenue increased by
19.4%, or $573,000, from $2,959,000 in the Second Quarter of Fiscal 1996 to
$3,532,000 in the Second Quarter of Fiscal 1997. This increase was attributable
primarily to an increase in the number of new users who have entered into
maintenance contracts, and to a lesser extent, to a price increase implemented
by the Company
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<PAGE>
on such maintenance contracts during the Second Quarter of Fiscal 1997 and to an
increase in services performed by the Company in connection with the general
release of the new Prophet 21 Acclaim product.
Gross profit. The Company's gross profit increased by 14.2%, or
$500,000, from $3,522,000 in the Second Quarter of Fiscal 1996 to $4,022,000 in
the Second Quarter of Fiscal 1997. Gross profit margin increased from 43.8% of
revenue in the Second Quarter of Fiscal 1996 to 46.2% of revenue in the Second
Quarter of Fiscal 1997. Gross profit margin attributable to system sales
increased from 42.3% of system sales revenue in the Second Quarter of Fiscal
1996 to 43.6% in the Second Quarter of Fiscal 1997. The increase in such gross
profit margin was attributable to the increased average selling price offset, in
part, by a decrease in the sales of certain Prophet 21 software upgrades which
generally carry higher margins. Gross profit margin attributable to service and
support revenue increased from 46.3% of service and support revenue in the
Second Quarter of Fiscal 1996 to 50.0% in the Second Quarter of Fiscal 1997.
This increase was attributable primarily to an increase in the number of new
users who have entered into maintenance contracts, and to a lesser extent, to a
price increase implemented by the Company on such maintenance contracts during
the Second Quarter of Fiscal 1997 and to an increase in services performed by
the Company in connection with the general release of the new Prophet 21 Acclaim
product.
Sales and marketing expenses. Sales and marketing expenses increased
by 11.0%, or $204,000, from $1,861,000 in the Second Quarter of Fiscal 1996 to
$2,065,000 in the Second Quarter of Fiscal 1997, and increased as a percentage
of revenue from 23.1% to 23.7%, respectively. Such increases were due primarily
to increased salesperson compensation and to increased marketing costs
associated with the new Prophet 21 Acclaim product.
General and administrative expenses. General and administrative
expenses increased by 6.3%, or $35,000, from $556,000 in the Second Quarter of
Fiscal 1996 to $591,000 in the Second Quarter of Fiscal 1997, but decreased as a
percentage of revenue from 6.9% to 6.8%, respectively. The increase in absolute
dollars in general and administrative expenses was due to increases in salary
expenses and staffing. General and administrative expenses decreased as a
percentage of revenue as a result of increased sales volume.
Research and development expenses. Research and development expenses
increased by 30.0%, or $164,000, from $547,000 in the Second Quarter of Fiscal
1996 to $711,000 in the Second Quarter of Fiscal 1997, and increased as a
percentage of revenue from 6.8% to 8.2%, respectively. Such increases were due
primarily to an increase in salary expenses and staffing. The Company also
capitalized $334,000 in software development expenditures during the Second
Quarter of Fiscal 1997.
Income taxes. The Company's effective tax rate was 39.3% and
40.0% in the Second Quarter of Fiscal 1996 and 1997, respectively.
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<PAGE>
Six Months Ended December 31, 1995 and 1996
Revenue. Revenue increased by 8.9%, or $1,417,000, from $15,897,000 in
the first six months of fiscal 1996 to $17,314,000 in the first six months of
fiscal 1997. System sales revenue increased by 3.4%, or $348,000, from
$10,198,000 in the first six months of fiscal 1996 to $10,546,000 in the first
six months of fiscal 1997. This increase was attributable primarily to sales
attributed to the beta release and the general release of the Company's new
Prophet 21 Acclaim product which began late in the Second Quarter of Fiscal
1997. Such increase was offset, in part, by a decrease in programming revenue
and by lower sales volume of Prophet 21 XL Software upgrades as many existing
customers, during the first quarter of fiscal 1997, were evaluating whether to
upgrade to XL9, the latest version of the Company's XL Software, or purchase the
new Prophet 21 Acclaim product. Service and support revenue increased by 18.8%,
or $1,069,000, from $5,699,000 in the first six months of fiscal 1996 to
$6,768,000 in the first six months of fiscal 1997. This increase was
attributable primarily to an increase in the number of new users who have
entered into maintenance contracts, and to a lesser extent, to a price increase
implemented by the Company during the Second Quarter of Fiscal 1997 and to an
increase in services performed by the Company in connection with the general
release of the new Prophet 21 Acclaim product.
Gross profit. The Company's gross profit increased by 8.7%, or
$628,000, from $7,206,000 in the first six months of fiscal 1996 to $7,834,000
in the first six months of fiscal 1997. Gross profit margin remained relatively
constant at 45.3% of revenue in the first six months of fiscal 1996 and 45.2% of
revenue in the first six months of fiscal 1997. Gross profit margin attributable
to system sales decreased from 44.8% of system sales revenue in the first six
months of fiscal 1996 to 43.1% in the first six months of fiscal 1997. The
decrease in such gross profit margin was attributable primarily to decreased
sales volume of optional Prophet 21 software which, in general, carries higher
margins offset, in part, by the Company's sales focus on larger system sales
resulting in an increase in the average price of systems sold. Gross profit
margin attributable to service and support revenue increased from 46.4% of
service and support revenue in the first six months of fiscal 1996 to 48.6% in
the first six months of fiscal 1997. This increase was attributable primarily to
an increase in the number of new users who have entered into maintenance
contracts, and to a lesser extent, to a price increase implemented by the
Company on such maintenance contracts during the Second Quarter of Fiscal 1997
and to an increase in services performed by the Company in connection with the
general release of the new Prophet 21 Acclaim product.
Sales and marketing expenses. Sales and marketing expenses increased
by 10.8%, or $412,000, from $3,829,000 in the first six months of fiscal 1996 to
$4,241,000 in the first six months of fiscal 1997, and increased as a percentage
of revenue from 24.1% to 24.5%, respectively. Such increases were due primarily
to increased salesperson compensation and to increased marketing costs
associated with the new Prophet 21 Acclaim product.
General and administrative expenses. General and administrative
expenses increased by 7.4%, or $82,000, from $1,102,000 in the first six months
of fiscal 1996 to $1,184,000 in the first
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<PAGE>
six months of fiscal 1997, but decreased as a percentage of revenue from 6.9% to
6.8%, respectively. The increase in absolute dollars in general and
administrative expenses was due to increases in salary expenses and staffing.
General and administrative expenses expenses decreased as a percentage of
revenue as a result of increased sales volume.
Research and development expenses. Research and development expenses
increased by 18.9%, or $211,000, from $1,115,000 in the first six months of
fiscal 1996 to $1,326,000 in the first six months of fiscal 1997, and increased
as a percentage of revenue from 7.0% to 7.7%, respectively. Such increases were
due primarily to an increase in salary expenses and staffing. The Company also
capitalized $699,000 in software development expenditures during the Second
Quarter of Fiscal 1997.
Income taxes. The Company's effective tax rate was 39.5% and
40.0% in the first six months of fiscal 1996 and 1997, respectively.
Liquidity and Capital Resources
Since its inception, the Company has funded its operations primarily
from cash generated by operations and available cash. The Company's cash flow
from operations was $3,545,000 for the six months ended December 31, 1996.
The Company's working capital was $16,097,000 and $15,252,000 at
December 31, 1995 and 1996, respectively.
The Company invested $589,000 in capital equipment and leasehold
improvements in the six months ended December 31, 1996. There are no other
material commitments for capital expenditures currently outstanding. The Company
also invested $699,000 in software development during the six months ended
December 31, 1996.
The Company does not have a significant concentration of credit risk with
respect to accounts receivable due to the large number of customers comprising
the Company's customer base and their dispersion across different geographic
regions. The Company performs on-going credit evaluations and generally does not
require collateral. The Company maintains reserves for potential credit losses,
and, to date, such losses have been within the Company's expectations.
In August 1996, the Company's Board of Directors approved a resolution to
repurchase up to 400,000 shares of its Common Stock in open market purchases. As
of December 31, 1996, the Company had repurchased 149,500 shares at a cost of
$837,000. As of February 5, 1997, the Company repurchased an additional 24,000
shares at a cost of $142,500.
The Company believes that available funds and the cash flow expected to
be generated from operations, will be adequate to satisfy its current and
planned operations for at least the next 24 months.
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<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of Stockholders of the Company was held on October
24, 1996.
There were 3,699,589 shares present at the meeting in person or by
proxy. The results of the vote taken at such meeting with respect to each
nominee for director were as follows:
Nominee For Withheld
------- --- --------
John E. Meggitt, Ph.D. 3,696,852 2,737
Charles L. Boyle, III 3,696,715 2,874
Dorothy M. Meggitt 3,696,852 2,737
Louis J. Cissone 3,696,852 2,737
Mark A. Timmerman 3,696,852 2,737
Also at the meeting, a vote was taken on the proposal to ratify the
appointment of Coopers & Lybrand L.L.P. as the independent auditors of the
Company for the fiscal year ending June 30, 1997. Of the 3,699,589 shares
present at the meeting in person or by proxy, 3,689,142 shares were voted in
favor of such proposal, 7,900 shares were voted against such proposal, and 2,547
shares abstained from voting.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
None.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter for which this
report on Form 10-Q is filed.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Prophet 21, Inc.
DATE: February 13, 1997 By:/s/ Charles L. Boyle, III
-------------------------
Charles L. Boyle, III,
President and Chief
Executive Officer
(Principal Executive Officer)
DATE: February 13, 1997 By:/s/ Thomas M. Giuliani
----------------------
Thomas M. Giuliani,
Chief Financial Officer and
Treasurer
(Principal Financial and
Accounting Officer)
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED INTERIM FINANCIAL STATEMENTS INCLUDED IN THE REGISTRANTS' FORM 10Q FOR
THE PERIOD ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FORM 10Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-20-1997
<PERIOD-END> DEC-31-1996
<CASH> 3,280
<SECURITIES> 6,837
<RECEIVABLES> 10,660
<ALLOWANCES> (278)
<INVENTORY> 1,801
<CURRENT-ASSETS> 22,647
<PP&E> 2,256
<DEPRECIATION> (539)
<TOTAL-ASSETS> 26,298
<CURRENT-LIABILITIES> 7,395
<BONDS> 0
0
0
<COMMON> 40
<OTHER-SE> 18,863
<TOTAL-LIABILITY-AND-EQUITY> 26,298
<SALES> 17,314
<TOTAL-REVENUES> 17,314
<CGS> 9,480
<TOTAL-COSTS> 9,480
<OTHER-EXPENSES> 6,751
<LOSS-PROVISION> 1,083
<INTEREST-EXPENSE> (182)
<INCOME-PRETAX> 1,265
<INCOME-TAX> 506
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 759
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.19
</TABLE>
